How to measure Social CRM ROI

One of the question frequently asked about Social CRM or Social Media is What is the ROI? This is a great question to ask given the need to justify any major investment, especially after the great recession. Unfortunately, many people (and this includes so called “experts” or “thought leaders”) are missing woods for the trees while trying to answer this question.

It is important to remember that Social CRM is the business strategy of engaging customers through Social Media with goal of building trust and brand loyalty (for more on Social CRM definition, see this).

Strategy is a plan of action designed to achieve a particular goal. Social CRM is a plan of action to build Trust and Loyalty. Social CRM is not a “technology”, “system” or “processes”. While executing Social CRM (strategy), Social Media technology (tools) will be used to achieve the goal (building trust and loyalty), but tools are different from plan. It is very important to remember this distinction between strategy, tools and goals.

Social CRM (strategy) ROI depends on how well Social Media technology (tools) is used for achieving the goal (building trust or loyalty). Return on Investment (ROI) is associated with how well the goal has been achieved and resultant business benefits given the investments and not with tools Per se.

In other words, we need to define measurable Social CRM goals and a clear plan of action for achieving them before embarking upon any Social CRM initiative. And remember, ROI is not associated with Social Media as they are the technological tools used to achieve the goal of building trust and loyalty.

In order to measure Social CRM ROI, first step is to define measurable Social CRM goals, then workout an action plan for achieving these goals, execute the plan and quantify the business benefits arising out it. And this forms the basis for calculating Social CRM ROI (and remember, not Social Media ROI).

What do you think? Please do share your comments and feedback:

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4 responses to “How to measure Social CRM ROI

  1. I was hoping for more.  You didn’t answer your premiss of “HOW”  What tools to use,  HOW to put a strategy together.  Good question though.

  2. Indeed.  Social media provides a mechanism for creating more authentic customer relationships and interactions.  Consumers have become numb to the homogenized media campaigns of the last several decades because they are so obviously fake; and with technology, much easier to avoid (e.g.  everyone uses a DVR).  As a result, there is no trust or respect for the brand and the company must compete on price alone.  Social media enables a more authentic relationship that goes deeper than purely price comparison, this is going to be critical in an era where pricing power is for the most part weak. 

    • Thanks Blaine for sharing your thoughts, much appreciated!

      You are right, consumers have become numb to mass or homogenized media and Social Media can be effectively used for more authentic customer relationships – for engaging customers.

      Thanks again for sharing your thoughts!

      Harish Kotadia

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